After running a 12-month test, U.S.-based digital asset investment management DAiM has announced the launch of the first employer-sponsored 401(k) plans that use bitcoin as a base currency.
According to the announcement today, DAiM notes that the new service is compliant with the Retirement Income Security Acts of 1974 (ERISA) and will be fully available from 2021.
The crypto manager said it would work closely with companies and serve as an advisor and custodian to create a 401(k) plan with a flexible recommended model portfolio and 10% allocation to Bitcoin.
DAiM will also be responsible for selecting, monitoring, and benchmarking the investment offering, as well as a plan fiduciary.
The bitcoins will be stored in Institutional Cold Storage Custody with Gemini Trust, thus allowing DAiM to easily transfer BTC to employees leaving the participating companies.
Since 2018, U.S. citizens are allowed to hold cryptocurrencies in their personal retirement accounts, brokerage accounts, and 401(k) rollovers, following the tax imposition by the Internal Revenue Service on Bitcoin.
However, DAiM’s Chief Operating Officer, Adam Pokornicky, made it clear that it has been impossible to offer Bitcoin inside company-based plans without taking a penalty or quitting one’s job until now.
He further added that the conventional wealth administration sectors have been slow to warm up to Bitcoin, pointing there are barely any investment advisors offering licensed and regulated access to Bitcoin directly in brokerage and retirement accounts.
Pokornicky ascribes the industry’s hesitation to serious regulatory red tape around crypto abidance, stressing that it took “almost a full year of slow-building” before DAiM’s innovation was endorsed for providing its employer-sponsored facilities.
Pokornicky also highlighted the sharp rise in demand for Bitcoin from retirement investment and said:
“We’ve seen most demand from individuals between the ages of 28-45.”
According to him, the leading cryptocurrency has proved itself as a viable addition in modern portfolios, and “individuals should have an opportunity to ‘Get Off Zero’ and invest directly through their retirement account.”